Welcome to 20 Essex Street's first Insurance Case Update which will be published on a quarterly basis. These updates are aimed at highlighting interesting developments in case law relevant to insurance and reinsurance practitioners. In this Insurance Case Update, Susannah Jones looks at the decision in Axa Corporate Solutions Assurance S.A. v Weir Services Australia Pty Limited, in which Alexander Layton QC of 20 Essex Street acted for the defendant.The case raises interesting jursidictional points regarding global and local insurance policies. Tom Leary examines AIG Europe Ltd v OC320301 LLP, an appeal against a decision of Teare J as to the meaning of an aggregation clause applicable to all solicitors' indemnity policies. Lastly, Alexander Thompson looks at Personal Touch Financial Services Ltd v (1) SimplySure Ltd and (2) Usay Business Ltd, which touches on points relating to the scope of the regulated activity of introducing agents, and the interpretation and operation of representative agreements between insurers and agents.
1 Axa Corporate Solutions Assurance S.A. v Weir Services Australia Pty Limited  EWHC 904 (Comm)
Court: Commercial Court (Blair J)
Judgment date: 21 April 2016
Clyde & Co LLP for the Claimant Herbert Smith Freehills LLP for the Defendant
Alexander Layton QC of 20 Essex Street acted for the Defendant in this jurisdictional skirmish. It provides a useful example of how the English Court approaches the difficult procedural questions arising where an insurer has provided a worldwide, integrated liability insurance programme consisting of English law global policies which overlap with local policies in countries where the assured's group companies carry on business.
Two sets of proceedings had been issued in relation to the coverage dispute between the parties: (1) proceedings brought by Weir in the New South Wales Court seeking indemnity under a "broadform" liability policy issued in Australia, alternatively under the global policies and (2) a claim in the English Court by AXA seeking declaratory relief in relation to global liability policies issued in England.
Weir sought to recover legal costs incurred and a collar payment made in an arbitration in Sydney.
As to the policies, neither form of policy had a jurisdiction clause.The global policies were governed by English law and the local policy by the law of an Australian State. It was common ground that Weir had to look to the local, Australian, policy first, and then to the global policy so far as it provided cover over and above.
Against this background, Blair J was faced with two applications;Weir sought to set aside the order granting permission to serve the English proceedings on it in Australia and AXA sought an anti-suit injunction restraining Weir from pursuing its
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claim in Australia to be indemnified under the global liability insurance.
The Natural Forum
In relation to Weir's application, Blair J had to determine whether England or Australia was the most appropriate forum in which to determine the coverage dispute under the global policy. His judgment provides a useful example of the factors which are likely to carry the most weight with the English Court.
In particular, the Judge found that the strongest argument in favour of the insured was that the New South Wales Court could try the whole dispute, whereas the English Court could only deal with the position under the global policies. Despite the attraction of the solution proposed by Weir, Blair J found that in this "relatively balanced debate" the decisive point was that the global policies were subject to a choice of English law and (1) stood at the apex of a worldwide, integrated liability insurance programme with local policies in many different countries coming in beneath and (2) were in a form widely used by AXA and in general such policies are governed by English law.
Blair J adopted statements in Dicey and Briggs that where English law governs there is a "strong tendency" and an "institutional view" that England is that natural forum where a policy was written on the London market and is governed by English law. Indeed, Blair J placed such weight on these points that they outweighed the obvious difficulties and disadvantages of allowing both sets of proceedings to continue. He therefore refused Weir's application to set aside the order granting permission to serve the claim in Australia.
The Anti-Suit Injunction
Blair J also refused AXA's application for an anti-suit injunction restraining Weir from pursuing claims under the global policies in Australia.
The test was of course whether AXA could prove that it would be unconscionable, vexatious or oppressive to pursue those proceedings. AXA failed to do so. Weir's claim in Australia was plainly tactical in that it was intended to strengthen Weir's aim of having the insurance claim tried in Australia.There was nothing illegitimate about that aim and it did not amount to unconscionable conduct.
The mere fact that a claim was brought in a forum other than the natural forum was not in itself a ground to grant an anti-suit injunction, nor was the risk of inconsistent judgments arising from parallel proceedings.
Having refused both applications before him, Blair J was permitting two sets of
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proceedings under the global policies to remain on foot. He sought to case manage his way out of this problem; because the parties' positions under the Australian policy had to be determined first, the English proceedings should be stayed pending judgment in Australia in relation to the Australian policy.
Since handing down his Judgment, Blair J has refused to impose conditions on his stay of the proceedings. He has also emphasised that nothing in his decision was intended to influence the Australian Court's decision as to how to manage the proceedings before it, demonstrating the deference that English Courts are willing to show to foreign Courts."
For further information on this case please contact Susannah Jones at firstname.lastname@example.org
2 AIG Europe Ltd v OC320301 LLP  EWCA Civ 367
Court: Court of Appeal (Longmore, Kitchin and Vos LLJ) Judgment date: 14 April 2016 Mayer Brown for the Appellant Royds LLP for the Respondent Russell-Cooke for the Law Society
This was an appeal against a decision of Teare J as to the meaning of an aggregation clause applicable to all solicitors' indemnity policies pursuant to the requirements in the Solicitors' Act 1974 for compulsory liability insurance and the Minimum Terms and Conditions required to be incorporated into such policies.
The relevant aggregation clause provided, inter alia, that "when considering what may be regarded as one Claim for the purposes of the limited contemplated . . . all Claimants against any one or more Insured arising from . . . similar acts or omissions in a series of related matters of transactions . . . will be regarded as One Claim."
IPL, a solicitors firm specialising in international legal work, had such an indemnity policy when they were engaged by Midas International Property Development plc to assist with holiday resort developments in Turkey and Morocco. IPL created an escrow scheme by which it held investments in the project and there was also a deed of trust, granted in favour of the investors, holding security over the land to be purchased for the developments.
IPL was not to release funds from the escrow account to the local Midas developer until the value of the security held on trust was the same as the total amount of the investments to be protected. In fact, IPL released the investments funds in error such that, when the development failed, the investors lost over 10m.
The Insurer,AIG, sought a declaration that the claims by the 214 investors were to be considered "One Claim" for the purposes of the aggregation clause.Teare J
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refused to grant that declaration on the basis that the phrase "a series of related matters or transactions" meant matters or transactions which were in some way dependent upon each other. It was common ground that the individual payments out of the escrow account were not dependent upon each other.
Court of Appeal
The appeal by AIG was allowed and the case was remitted to the Commercial Court:
1. The phrase "a series of related matters or transactions" was not restricted to matters or transactions which were in some way dependent upon each other and included transactions which were related by an intrinsic connecting factor, such as the nature of the transactions themselves.The judge had been wrong to hold otherwise
2. However, "a series of related matters or transactions" did not include transactions which were connected only by some extrinsic factor, such as the fact that they each related to the same property development or areas of land.This geographical connection was too remote to make the transactions themselves "related".
3. The court was not, on appeal, in a position to make any findings of fact for the purpose of applying the aggregation clause and the case would therefore be remitted to the Commercial Court for determination in accordance with this guidance.
4. It should be noted that when construing any insurance policy in the context of the availability of wide aggregation clauses and well as narrow ones, the parties' choice not to agree the widest form of the clause must be respected.
For further information on this case please contact Thomas Leary at email@example.com
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Personal Touch Financial Services Ltd v (1) SimplySure Ltd and (2) Usay Business Ltd  EWCA Civ 461
Court: Court of Appeal
Judgment date: 17th May 2016
Shakespeare Martineau LLP for the Appellant Greenhalgh Kerr for the Respondents
This was an appeal on the question whether an insurer ("PTFS") was entitled to terminate a Compliance Agreement and Appointed Representative Agreement (the "Agreement") with its introducing agent, SimplySure Ltd ("SimplySure"), on the basis that the agent was conducting regulated activities under the Financial Services and Markets Act 2000 without the authorisation of PTFS. It also raised the question whether the transferee of the Agreement, Usay Business Ltd ("Usay"), was entitled to receive renewal commissions under the Agreement following its termination.
The Court of Appeal's judgment touches on one point of general interest relating to the scope of the regulated activity of introducing agents, and two relating to the interpretation and operation of representative agreements between insurers and agents.
In 2006 PTFS entered into the Agreement and appointed SimplySure to act as its appointed representative for the purpose of soliciting applications for private medical insurance ("PMI"). Under the Agreement, SimplySure paid a monthly fee to PTFS, and PTFS paid SimplySure commission on policies sold to or renewed by customers.
PTFS provided SimplySure a standard form for a "fact-find" (in essence a questionnaire), to be completed with information provided by a potential client to enable advice to be given to that potential client concerning a new PMI to be taken by the client.The questionnaire contained three parts: a first section requiring basic information (names, addresses etc); a second section on "Existing Policy Details" (including the nature of the existing PMI cover); and a rubric entitled "Private Medical Insurance (to be completed by PMI authorised advisors only)" on matters such as the budget and the future affordability of a policy.
At the relevant time, PTFS was authorised to sell insurance under the Act, but SimplySure was not. However, PTFS had accepted responsibility for SimplySure so that the latter was an exempt person under section 39 from the well-known general prohibition in section 19, save that it only authorised certain advisors of SimplySure by writing, pursuant to clause 3 of the Agreement.
On an inspection by PTFS, the insurer was told that "prospect advisers", that is advisors who were not authorised by PTFS, conducted initial fact-finds under sections one and two of the forms before referring the potential client to an authorised adviser to complete the rubric. On this basis, PTFS terminated the Agreement under clause 7, which stated, "It is a condition of the Agreement that the
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Continued: Page 6
Appointed Representative be aware of and abide by the rules of the regulator..."
On these facts, the Court of Appeal held as follows:
1. SimplySure was in breach of clause 7 of the Agreement because it had been carrying out a regulated activity under section 22 of the Act without the authorisation of PTFS.The Court agreed with the Judge that SimplySure was both "making arrangements for another person (whether as principal or agent) to buy, sell, subscribe for or underwrite a particular investment" and "making arrangements with a view to a person who participates in the arrangements buying, selling, subscribing for or underwriting investments" under, respectively, article 25(1) and 25(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
2. Properly construed, clause 7 of the Agreement was a true condition that entitled the insurers to terminate the Agreement, irrespective whether the breach had caused damage or not.
3. The words in the title to the rubric did not preclude PTFS from relying on the breach in clause 7, as the words did not mean that section 2 could be completed by someone who had no authorisation at all.This was because PTFS also authorised individuals to sell life insurance and those advisers were individuals who were competent to complete section 2 of the form.
4. PTFS was no longer liable to pay renewal commissions under the Agreement following its lawful termination. In the absence of an express obligation to pay commission after termination, the usual rule applied, namely only obligations that had accrued prior to termination remained outstanding.There was no basis for implying into the Agreement an executory obligation to pay renewal commissions after termination.
On the first issue, in particular, Sir Stanley Burton (with whom Gloster and MacFarlane LJJ agreed) expressly approved the definition given to those articles by the FCA "Perimeter Guidance" and held that a broad interpretation should be given to them. He held that completion of the first and second sections by employees or agents of SimplySure who were not authorised by PTFS was in breach of the general prohibition because (i) the purpose of completing the first part of the fact-find was for the client to buy PMI; (ii) arranging for an unauthorised person to visit or to interview the client was an arrangement within article 25(1), and also 25(2) since it was an arrangement with a view to the client, who
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participates in the interview, buying PMI; and (iii) this conclusion was supported by the fact that SimplySure put the unauthorised person in a position in which he could advise the client (see para 26).
For further information on this case please contact Alexander Thompson at firstname.lastname@example.org
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